Term Life Insurance – What is it and how does it work?

Term life insurance is a common coverage option for life insurance protection.  Term life insurance is the least expensive type of coverage, making it affordable for families and business owners.  Term life insurance provides coverage for a specific number of years.  The number of years will depend on how long the policy owner would like to own the policy.  Term life insurance is available for coverage periods from 1 year up to 35 years.  Best of all, the cost of coverage will remain the same throughout the entire period!  The low cost allows the insured to purchase enough term life insurance to protect family, assets, and business in the event of an unexpected death.  As with other types of life insurance coverage, the death benefit is tax free to the beneficiaries.

Term life insurance Erie CO

For young families, this coverage can provide protection to your spouse and children through middle school, high school, college years, and beyond.  For a business owner, this can provide adequate coverage until the business owner decides to sell the business, retire, insure a key person (key man insurance), fund a buy/sell agreement, or utilized for succession planning purposes.  Once the term life insurance policy is approved, it will stay active unless a premium payment is missed, which will cause the policy to lapse.  With proper planning, this should not be an issue.  At the end of the term period you have options to renew the policy for a specific number of years, convert the policy to a permanent type of coverage, or surrender (drop) the coverage because there is no longer a need.  If you are in the market for term insurance, or would like to meet with a professional advisor to review your options, contact us today!

Summary

  • Affordable – low cost for coverage allows for largest amount of protection for smallest premium compared to other types of life insurance
  • Specific Number of Years – Coverage remains in effect for a specific number of years that is decided when the policy is applied for
  • Options –  renew, convert, or surrender the policy at the end of the term period

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.